Title of Paper

Hotel Operating Performance Stabilization in Emerging Markets – Myth or Fact?

Author Bios (50 Words for each Author)

Karen Tan (karen.tan@temple.edu) is a third-year Ph.D. student at the Department of Tourism & Hospitality Management, Temple University. Having worked on numerous tourism and hospitality industry projects across Asia Pacific, her research interests include the study of tourist well-being, luxury developments and luxury consumer behavior.

Xiang (Robert) Li, (robertli@temple.edu) Ph.D., is a professor and Washburn Senior Research Fellow at the Department of Tourism and Hospitality Management, Temple University. Robert's research mainly focuses on destination marketing and tourist behavior, with special emphasis on international destination branding, customer loyalty, and tourism in Asia.

Seoki Lee, (leeseoki@psu.edu) Ph.D., is an associate professor of the School of Hospitality Management at the Pennsylvania State University. His research mainly focuses on hospitality and tourism issues in the financial and strategic management including following topics: corporate social responsibility, internationalization, franchising, and diversification.

Abstract (150 Words)

Guided by the resource base theory, this study investigates the performance stabilization of new hotels in emerging markets. Potential competitive advantages, i.e., real estate type (mixed-use vs. standalone), location type (distance from downtown and airport) and scale (room count and meeting space), were assessed for their impacts on pace and level of performance stabilization. Performance measures included profitability measures, e.g. gross operating profit percentage (GOP%), in addition to standard operating metrics of ADR, occupancy and RevPAR. Performance data from 105 hotels in China, Indonesia and Thailand showed that contrary to prevailing industry assumption, which originated from mature markets, most hotels did not stabilize within the industry norm of 3 years when standard operating metrics were used. Instead, GOP% was shown to be a better measure of stabilized performance. The impact of each competitive advantage on pace and level of GOP% stabilization was also empirically assessed.

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Hotel Stabilization Short Abstract 20190110.docx (27 kB)
Short Abstract

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Hotel Operating Performance Stabilization in Emerging Markets – Myth or Fact?

Guided by the resource base theory, this study investigates the performance stabilization of new hotels in emerging markets. Potential competitive advantages, i.e., real estate type (mixed-use vs. standalone), location type (distance from downtown and airport) and scale (room count and meeting space), were assessed for their impacts on pace and level of performance stabilization. Performance measures included profitability measures, e.g. gross operating profit percentage (GOP%), in addition to standard operating metrics of ADR, occupancy and RevPAR. Performance data from 105 hotels in China, Indonesia and Thailand showed that contrary to prevailing industry assumption, which originated from mature markets, most hotels did not stabilize within the industry norm of 3 years when standard operating metrics were used. Instead, GOP% was shown to be a better measure of stabilized performance. The impact of each competitive advantage on pace and level of GOP% stabilization was also empirically assessed.